EMI Group, as part of a larger effort to support peer-to-peer networks that allow the sharing of licensed music files, has agreed to share its digital library with P2P start-up Mashboxx.

The record label, whose 1,000-plus artists include Janet Jackson, Gorillaz, the Rolling Stones and Coldplay, is not the first to license its content for use on Mashboxx. According to founder Wayne Rosso, the New York-based Mashboxx--currently preparing for a beta test launch--already has deals with Sony BMG and Universal, and has completed negotiations with Warner Music.

Rosso has spent the past two years building the infrastructure for Mashboxx, an idea that he credits in part to his business ties with former Sony BMG CEO Andrew Lack. In 2002, while serving as president of now-defunct P2P powerhouse Grokster (a position he had left by the time the company started hitting the worst of its legal trouble), Rosso worked with Lack to try to solve the problem of illegal file-sharing.

Rather than try to fight the record labels, Rosso wanted to "convert" to a format the labels would support, without resorting to a P2P model that simply filtered out major-label content. Napster had recently tried that, and failed. At that point, Rosso said, a legal P2P that offered a full range of music wasn't possible. "The technology hadn't really matured to the point that it could be done effectively."

By 2004, technological developments made legal P2P feasible, but putting the business together was still an uphill climb. "It's taken almost two years to get all the licenses together," Rosso explained. "Building the technology is not easy."

One of the reasons is that Mashboxx won't operate in a "walled garden" environment that would only allow users to connect to other Mashboxx users. Instead, the Mashboxx client will follow the path of those who use more traditional peer-to-peer services, connecting to established file-sharing networks like Gnutella. With Mashboxx, music enthusiasts can still search for a song and download it free of charge.

But this is where the licensing comes in. A song downloaded from Mashboxx--like a song downloaded from fellow "legal P2P" iMesh--is entirely free if it's "unclaimed" by a record label. If a label has agreed to license the song, however, it's only playable five times before the person who downloaded it needs to pay a fee. (If a label licenses a song that Mashboxx users had already been sharing, Rosso noted, anyone who had downloaded the file before the label "claimed" it would not have to pay the newly instituted fee.)

The fee for purchasing a Mashboxx-downloaded song will be 99 cents.

Peer-to-peer networks might still be virtually synonymous with music piracy, but a growing number of networks have begun switching to a label-friendly format, hoping to provide an alternative to the storefront model that characterizes most online music stores. Some, including iMesh, were once free, unregulated networks that switched to label-friendly content, as happened very recently to former file-sharing giant Kazaa. Others, like Mashboxx and the ad-supported Qtrax, were founded with legal content in mind.

There's one major advantage that makes P2P services, legal or illegal, stand out among the Napsters and Rhapsodys of the world, according to Yankee Group analyst Mike Goodman. That advantage is content. A service like Mashboxx, tapping into the enormous Gnutella Network, could give users access to music that's too obscure even for iTunes. "There's a lot of public domain music (on P2P networks)," says Goodman.

But at the same time, legal P2Ps like Mashboxx face several roadblocks. "People don't know they exist," Goodman observes. These days, P2P services still make headlines primarily when they're being shut down at the request of various courts.

And it's a crowded field: An overwhelming number of services have already saturated the 20 percent of the online music marketplace that isn't controlled by Apple Computer's iTunes Music Store. Mashboxx's status as a completely new brand could both help and hurt it. "On the plus side, they don't have a legacy (of piracy and legal problems), but they don't have a well-known brand, either," Goodman says. "It's an incredibly competitive marketplace, given the limited share that's available and the number of music services that are trying to compete in this segment."

Nevertheless, EMI spokesman Adam Grossberg said the company is enthusiastic about the potential success of labels' partnernships with the growing number of legal P2P services.

In addition to Mashboxx, EMI has negotiated deals with iMesh, Peer Impact, QTrax and the European service GNAB. "We certainly think that legal P2P would offer a great consumer experience," he says. "It's good for fans, good for music artists, and good for the digital community as a whole," he said.

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